It's no surprise that online Food Delivery is one of the hottest and most rapidly growing segments in India. Growth has been staggering -- by some estimates it will grow 3X to $13 Billion by 2025. Indians love their food! and a traditional cook at home mindset is now evolving to significantly more dine out and order in. No surprise the largest global investors, like Tiger Global and SoftBank, have made big investments in India's homegrown food delivery apps.
The online food delivery market – currently a duopoly of Swiggy and Zomato -- has taken traditional growth opportunities (a la Uber) by raising huge swaths of cash and not worrying about profitability too much, and instead focusing on grabbing market share and building brand. Unit economics might look troublesome for now, especially given each company's >$10B valuation. However, investors community has faith in the path that Swiggy and Zomato are treading. Last year Zomato had a highly successful IPO and Swiggy has recently raised $ 700 Million.
Vumonic's real-time data engine and own private data source (the largest and most accurate in India) allows us to slice and dice into the analytics and get the real story – not just for food delivery, but for ecommerce, OTT, ride hailing, and dozens of other online platforms. Let's take a peek at a high level and see what's going on with Swiggy and Zomato in the last few years:
From our analysis, Swiggy has pulled ahead since the first lockdown. What goes into Swiggy's successful post-COVID strategy?
It is interesting to note that the Average Order Value (AOV) for both platforms is about Rs. 385. This means that there are more users ordering more frequently with Swiggy than Zomato. The data substantiates this premise – Average Order Per User for Swiggy stands at 3.58 orders per month in 2021 -- 17% higher than Zomato. So, Swiggy has found a way to generate more revenue from each user compared to Zomato.
This article isn't all celebrating Swiggy, though -- further analysis shows Zomato looking to play the long game, focusing on Tier 3 growth. This is very strategic and deliberate, as these markets will be profitable long-term, and take time and resource to invest in. Yes, Swiggy is still predominantly a Top Tier player, but it has done so by maximising gains from the easily acquirable, tech-evolved users residing in Top cities in India.
TLDR? Currently Swiggy has a slight edge, but we can see offshoots of a long term strategic play from Zomato. Both of these companies have great marketing departments, strong operations and empathetic leadership and are even poised to capitalise on India’s hunger!
Keep watching this space for peeling off another layer in the evolution of the Food Delivery market in India.
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Written by : Anupam Asthana
Date: 11 Feb 2022
Vumonic Datalabs is a global consumer intelligence platform. We provide high quality, deterministically linked, large structured data that can be used to derive deep consumer, business and market insights. Our proprietary data pipelines deliver unbiased actual transaction data collected in a privacy secure manner via large global panels.
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